Cryptocurrency Mining is Now An Industrial Activity in Iran

The government of Iran has officially legitimized cryptocurrency mining as industrial activity in the country, according to reports from Mehr News Agency. Per the report, the decision was taken during a Sunday cabinet session chaired by Iran’s President Hassan Rouhani.

Henceforth, cryptocurrency miners will be required to acquire a license from Iran’s Ministry of Industry, Mines, and Trade.

However, miners are implored to note that cryptocurrency mining is still a taxable activity, except the virtual currencies are sent abroad and the revenues are redirected to the development of Iran’s economy.

Moreover, cryptocurrencies are still rated illegal in Iran, and are outlawed as modes of payment or transactions.

Iran Cryptocurrency

Iran’s mining-friendly government is still crypto-phobic, and still warns citizens who buy cryptocurrencies of the risks associated with the holding, handling and transacting of such, with the emphasis that banks will not give guarantees in case of losses.

The go-ahead from the Iranian cabinet followed a government committee greenlight for cryptocurrency mining, as revealed by the governor of the Central Bank of Iran, Abdolnaser Hemmati, on July 21:

“A mechanism to mine digital coins was approved by the government’s economic commission and will later be put to discussion at a cabinet meeting.”

Crypto Mining Is Iran’s Weapon

According to the Mehr News report, the legal approval of the mining industry in Iran is an optimistic sign for many cryptocurrency experts and maybe the first step towards the legalization of cryptocurrencies in Iran.

Iran could soon be a flourishing hub for cryptocurrency exchanges and other crypto-entities. Besides, the mining sector has proved very useful in circumventing the crippling economic crises that the United States’ sanctions have plunged the country into.

Considering that Iran already has the basic resource for mining, cheap electricity, it is a wise move to save its dipping economy from extinction. Iran is currently one of the cheapest countries in which to mine cryptocurrency, because of the generous subsidies granted to the power sector in the country.

In 2017 alone, the country had to spend $45.1 billion on energy subsidies, an amount that accounted for about 10 percent of its annual GDP for that year. Per Global Petrol Prices, the cost of electricity per kilowatt-hour in Iran as of March was $0.03 across the board, a rate that is far lower than the global average at the time – $0.15 per kWh- and only rivaled by that of Burma.

Iran’s low electricity rates have attracted crypto miners from all parts of the world, including China. However, it is to be expected that the rates will spike after this legalization, because cryptocurrency miners will likely be charged a higher rate than regular electricity users.

According to Mehr News Agency, the Iranian government intends to raise electricity prices for cryptocurrency miners to $0.07 per kWh, and that’s still relatively low.

We Can All Borrow A Leaf From Iran’s Books

Iran’s pro-crypto switch, at least towards mining, is something that the rest of the crypto world has to learn a lesson or two from. The authorities apparently went from viewing the sector as a threat to leveraging on the turn-around that it could mean for their economy.

In June, the Iranian Energy Minister called for subsidies to be lifted off the energy used by cryptocurrency miners in Iran. The government frowned on the sector and labeled them an energy-draining, environment-polluting sector.

It only took a willingness to look at it all from another angle, and now in July, the government is smiling and shaking hands with crypto miners, figuratively.

It remains to be seen whether the U.S. government will now take steps to enforce sanctions against Iranian mining. American strategists now have to deal with a much more powerful adversary, as Iran will now be solidly backed by the influence of its considerable mining sector.

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Austrian Printing House Releases “Chainlock” Crypto Cold Wallet

The Austrian State Printing House (OeSD) has released a cryptocurrency cold wallet, through its subsidiary company Youniqx Identity AG. Per a press release published on July 29, the solution was developed to combat the worrying increase of cryptocurrency theft and other crypto-crimes that are caused by wallet vulnerability.

The hardware wallet is justly dubbed Chainlock, and is purportedly a highly secure and scam-proof storage solution that enables the offline storage crypto wallets to access keys. The device is also capable of generating the private key only when needed, and is water and heat resistant.+

“So-called hot wallets are a great security risk: the private key used for such cryptocurrency accounts is stored at exchanges or connected to the internet in another way,”

the report reads. The report revealed that the Chainlock wallet will be available via the firm’s partners, including Tokenize Exchange in Singapore and Coinfinity in Central Europe.

Chainlock

Securing its Reputation

The wallet will reportedly operate 100% offline, and a patent application was filed to this effect, so it will rule out the possibility of having unauthorized users gain access to private wallet keys.

Private key scammers will hence be unable to lift keys off the internet, NFC, WiFi, CryptoLocker, and such other means. Inevitably, only the user can gain access to the wallet. Nobody can view the key pair – not even YOUNIQX staff. The private key’s owner will as well benefit from coins created due to forks.

Youniqx added that the device has already been highly accepted in the relevant corners, and will work towards helping retail investors.

“This highly secure solution has been met with great enthusiasm at the relevant trading platforms. What is more, Chainlock is also the perfect token container for STOs pursuing a retail strategy,” YOUNIQX said.

The Chainlock launch goes to further seal the Austrian printing House (OeSD) Group’s efforts to be renowned as a high-security company with a focus on secure identities. Being a full-service provider of ID and e-government solutions, OeSD offers highly secured Austrian passport and personalization solutions for identity documents.

In 2018, the portfolio was extended through the establishment of the subsidiary YOUNIQX Identity AG, which offers solutions in the field of secure digital identities. With MICK (My Identity Check), the highly secure video identification service, MIA (My Identity App), the world’s first system offering integrated identity management, and Chainlock, the secure private key, the company is revving up to be relevant in the future of digital technology.

Cold Storage to the Rescue?

US cybersecurity company CipherTrace reports that digital currencies amounting to 1.2 billion USD were stolen in the period of January to March 2019 alone. $950 million of that amount were from thefts from cryptocurrency exchanges and infrastructure services such as wallets, up nearly 260 percent from $266 million in 2017.

The crime spike has made it increasingly hard for first-time investors to buy cryptocurrency, thereby slowing mass adoption down on a large scale. However, this has caused the crypto sphere to pay a lot more attention to cold storage wallets as a lasting solution.

Last week, it was reported that Civic Technologies and BitGo are working on a privacy-focused cold crypto wallet. Although the development of the product is still underway,  the company detailed that the wallet will only store minimum user data required only for KYC and other compliance purposes.

“With the Civic Wallet, individual users are getting more privacy and security in managing their cryptocurrency than ever before,” Mike Belsh, co-founder and chief executive of BitGo added.

“It used to be that if you lost your mobile device, containing your digital wallet’s private key, you lost all of your crypto. This is not the case with Civic’s new wallet. This is a big step forward for individual users.”

If cold wallets successfully solve the security issues for cryptocurrency wallets, it’s hard to say what else could hinder adoption.

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Justice Department Slams Crypto Escrow Exec Over $7 Million Fraud

The U.S. Attorney’s Office of the Southern District of New York has indicted the head of a bitcoin escrow company for defrauding investors of $7 million.

According to the press release published by the division of the Department of Justice, head of Volatnis Escrow Platform LLC, Jon Barry Thompson, was charged with two counts each of commodity and wire fraud on Thursday.

Thompson was accused of airbrushing investment risks and false representations of digital assets custody and control, per the release.

Jail

Using Crypto to Defraud

Manhattan U.S. Attorney Geoffrey S. Berman stated that Thompson lured investors by painting cryptocurrency as a zero-to-low risk investment. Thompson allegedly duped two unnamed companies of $3 million and $4 million in June and July 2018.

He promised to invest the funds in Bitcoin and sent false profit records to the victim companies. Neither of the companies received any bitcoin, and Thompson did not return the invested funds.

Jon Thompson induced investors to engage in cryptocurrency transactions through his company, Volantis Market Making, by touting a transaction structure that would eliminate any risk of loss during the purchase.

As his clients soon realized, however, Thompson’s representations were false, and these cryptocurrency investors ultimately lost all of the money they had entrusted with him because of his lies,” said Geoffrey.

FBI Assistant Director-in-Charge Sweeney added that Thompson capitalized on the ignorance of both companies on cryptocurrency.  “Thompson allegedly thought no one would ask where their actual money went when they trusted him to invest in Bitcoin.

Using phrases and terminology that the victim companies didn’t understand, he allegedly preyed on their ignorance of the emerging cryptocurrency.”

The two commodities fraud charges that were slammed against Thompson each carry a maximum sentence of 10 years in prison, and each count of wire fraud carries a maximum sentence of 20 years in prison.  Thus, Thompson now faces a maximum sentence of 40 years in prison.

More Crypto-Greed

Cases of crypto-crime like Thompson’s fraud has been rampant of late. With the nascent growth of the cryptocurrency sector, more individuals are willing to go to desperate lengths to get their hands on some coins.

In March, 46-year-old New Yorker, Patrick McDonnell was indicted for swindling about 10 victims of at least $194,000 in cryptocurrency.

His method was similar to Thompson’s– under the flag of a website called CabbageTech, McDonnell promised investors that he would provide trading advice and purchase and trade cryptocurrency on their behalf.

He claimed to help his customers buy bitcoin when he was actually using the pooled funds for personal purposes.

On July 25, 46-year old William Green of Wall Township, Monmouth County, New Jersey was also charged by a grand jury for operating an unlicensed Bitcoin exchange.

Using a website dubbed Destination Bitcoin, Green converted fiat to cryptocurrency for his customers for a small fee. Although his crime is different from Thompson’s, his transmitting activities were not registered according to the prescribed rules guiding cryptocurrency exchanges.

Crypto scams are increasingly littering the face of the crypto sector globally, and are a major drawback for the growth of the sphere. The worrying rate is only making more regulators edgy towards digital assets, and this is causing restrictive crackdowns that are only making it harder for adoption and legalization of the coin.

In a recent finding on Bitcoin.com, $1.36 billion worth of cryptocurrencies was stolen by fraudsters during the first two months of 2018. Of this amount, cryptocurrency fraud accounted for 30 percent. It was followed by hacking attempts (22 percent), theft and exit scams (17 percent each), and phishing (13 percent).

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Abra Wallet Announces Restrictions for U.S. Customers

Abra, a top-of-the-line cryptocurrency wallet, will be taking steps to restrict Americans from accessing the entirety of its services. Abra published an update to its platform, which revealed that it will only be offering a limited service package to American users.

According to the update, U.S users will no longer be able to keep Bitcoin Gold, EOS, QTUM, Status, and OmiseGO tokens from August 29, 2019.

If these tokens aren’t converted to other compatible coins by the deadline, they’ll be automatically converted to Bitcoin.

Abra App Review

Read: Our Review of the Abra Wallet

In addition to this, the mobile wallet provider also made some specific decisions targeted at New York users. Going forward, Abra users residing in New York will no longer be able to make money transfers directly to the wallet with bank Automated Clearing House (ACH), wire transfers, or American Express cards and make withdrawals from August 29 as well.

Regulatory Uncertainty claims Another Victim

In the update, Abra specifically mentioned that the moves were necessitated by the current uncertainty that has engulfed the American crypto community.

“From presidential tweets to Congressional hearings, there is intense interest and scrutiny about cryptocurrencies and how they work. As a result of continued regulatory uncertainty and restrictions in the United States, we have to make some adjustments to our US business in an effort to continue to be compliant and cooperative with US regulations as they currently exist,” the update reads.

It is especially peculiar, because Abra is the second crypto-focused company to take action against American users this week alone, citing regulatory uncertainty.

The other company was Circle, a popular payment processor and operator of the Poloniex cryptocurrency exchange. However, instead of restricting users from certain services, Circle chose to move a section of its business to Bermuda.

In an announcement notifying users of the move, Circle revealed that the decision to move to Bermuda was because the country’s regulatory framework has so far been able to keep pace with innovations in the global crypto industry.

The company, however, added that regulatory limitations within the United States meant that they wouldn’t be able to offer some of their upcoming asset listings and platform capabilities, U.S.-based customers.

In part, the announcement states, “Unfortunately, because of US regulatory limitations, we will not be able to offer many of these new services to US persons for now. However, we’re committed to serving US customers as best we can despite the constraints.” Circle added that they’d be looking to advocate for changes to U.S. policies concerning crypto, but since they’re packing their bags, it doesn’t seem lobbying would be on their priority list, going forward.

Capitol Hill wants to discuss Crypto

There seems to be hope on the horizon, however. Earlier this week, the United States Senate published an announcement revealing that it would be holding a broader debate on regulations for cryptocurrencies and blockchain technology.

The hearing, entitled “Examining Regulatory Frameworks for Digital Currencies and Blockchain,” will be convened on July 30, with some notable names in the crypto, tech, and legal sectors set to be in attendance. Hopefully, they lay the groundwork for cryptocurrency regulations and get the industry moving forward.

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In BTC We Trust: U.S Citizens Choose Bitcoin Over Libra 

When it boils down to choice, Americans will choose Bitcoin over Facebook’s proposed currency Libra, consumer insights provider CivicScience revealed in a new survey.

Summarily, of the 1,799 U.S adults questioned for the survey, only 2 percent indicated that they could trust Facebook with any kind of personal data.

Breaking down the report, CivilScience showed that the small section was populated mainly by people who were between the ages of 18 and 24, who were heavy Facebook users, and who have had past experience with mobile payment apps like Venmo and Apple Pay.

How to Invest in Bitcoin

In stark comparison, 40 percent said they’d trust the Bitcoin more, while 19 percent said they would give either option about the same chance.

However, the report also pointed out that less than 10 percent of the surveyed population had actually bought cryptocurrencies.

Has Libra Lost Before the Race Even Started?

When news of the proposed Libra first broke out in June, speculations were that the digital currency would give Bitcoin a run for its money. In fact, immediate proofs were that the BTC market price took a plunge soon after the Libra whitepaper was released.

However, CivicScience brought the numbers to light, citing a July survey of more than 2,100 adults to gauge involvement in cryptocurrency. Of the total surveyed population, it was reported that 79% had heard of Bitcoin or other cryptocurrencies such as Litecoin, Ethereum, or Ripple. In comparison, only 6% of respondents have invested in cryptocurrency.

The staggering difference makes it necessary to wonder whether the popularity ratio that BTC is stacking against Libra is even relevant at all.

CivicScience chalked the margin up to the difference in the intended use of each digital currency, stating that the top reason for holding crypto in the U.S. was for long-term investments, and not use as an actual currency.

In fact, the purpose of cryptocurrency for easy, fast and safe transactions, as well as a hedge against adverse economic conditions was way down on the reasons for holding cryptocurrency, according to the polls. Looks like the public is not buying any of Facebook’s noble aims and objectives.

The Irony of Trust

Since Facebook launched its crypto venture, the trust issue has been one of the primary setbacks the corporation has been facing. And it’s not just because people don’t like Facebook. Zuck is great, but the pile of privacy breaches that his social media network has stacked up over the years is causing damage to his yet to be unveiled product.

Facebook has a dirt-poor track record with preserving user privacy, and this has been evident in numerous scandals, such as with the Cambridge Analytica scandal of 2012. Facebook allegedly sold user data to a private firm who used the information to manipulate user moods for the election.

The social media giant was recently fined a hefty $5 billion as restitution, but that’s not enough to buy back the trust.

David Marcus, who heads the Blockchain operations at Facebook and is directing the Libra effort, testified before a Senate Committee on July 16. Try as he might, Marcus could not convince the committee, or the general public, that it was safe to entrust personal financial data and hard-earned paychecks to scandalous, notorious Facebook.

It’s once bitten, twice shy for the public, and three times if it involves leaving money with Facebook, who proved that they could not even be trusted with data.

Bitcoin, on the other hand, is ironically triumphant. A currency that is unmanned, unregulated and as unstable as a woman with PMS, is trumping the world’s largest social media company on trust. You hate to see it. You really do.

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Study: Money Launderers Still Prefer Fiat to Cryptocurrency

Cryptocurrency has had its share of detractors since the first token launched some years back. Over the years the number of detractors has increased, but their complaint hasn’t.

They all sing the same tune—liking digital assets as tools that help criminals and money launderers. So far, even the President and top government officials have used this same line to undermine crypto. A recent study has shown that things are far from what they seem.

Money Laundering

New research from cryptocurrency intelligence firm Messari has shown that contrary to public consensus among crypto’s detractors, fiat currencies are still the preferred currency of choice for money launderers and other bad actors on the Dark Web.

The report cited sources from both the United Nations Office of Drugs and Crime and blockchain analysis firm Chainanlysis. According to the report, the ratio of Dark Net money laundering operations carried out with fiat currencies compared with crypto assets is a staggering 800:1.

Proving Uncle Sam Wrong

The research was carried out in light of criticism from Mr. Steve Mnuchin, the Secretary of the United States Treasury.

In a press conference convened last week, Mnuchin had echoed the sentiments of President Donald Trump, claiming that “Cryptocurrencies such as Bitcoin have been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking.

Many players have attempted to use cryptocurrencies to fund their malignant behavior. This is indeed a national security issue.”

However, as this report notes, it would seem that I the criminal industry, crypto assets are bested as the “legal tender of choice,” once again falling behind cash.
While Mnuchin’s statements were damning, he did also point out that the Trump administration could enforce crypto regulations in the future, per an interview with CNBC’s Squawk Box.

For now, Crypto’s the Lesser of Two Evils

Of course, both parties are right. On the part of Mnuchin, his assertion that crypto assets are linked to money laundering and other illegal activities is correct, as supported by recent reports here and here. But Messari’s report did one better. You can’t point the finger at crypto as a tool in the hands of money launderers, without pointing two fingers at cash too.

It also seeks to refute the claim of many that the establishment is a “cleaner” system than that being ushered in by crypto assets. It’s the same way anyone looking to argue about banks structure and seeming crime aversion won’t like to hear that a cargo vessel owned by JPMorgan Chase was recently seized with $1.3 billion worth of cocaine on it.

In contrast, only about $500 million in crypto assets has been spent by criminals since the year started.

They’re both terrible, but we can at least see which is worse. For now, we can put the “crypto is for criminals” rhetoric to bed.

Understandably, a lot of people believe that crypto assets are dangerous for the financial system, and there are multiple arguments to be made for this point. However, painting the assets as tools in the hands of criminals at this point has become mute.

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FINRA Talks Tough: Wants Brokers to Disclose All Crypto Dealings

The American government is stepping up in its objective to monitor cryptocurrency activities, and it wants everyone to cooperate with it as well. The Financial Industry Regulatory Authority (FINRA), America’s broker-dealer watchdog, published a Notice instructing member firms to disclose current or prospective cryptocurrency-related activities.

FINRA

Nothing New Here

According to FINRA, the new measures are nothing new. The watchdog alluded to its past dealings with members, querying them and their affiliates on existing or expected relationships with digital assets. The authority reminded such companies that a July 31 deadline had been set for communications while imploring companies that are yet to do so to make their intentions known.

The full outline of the notice solicited that all FINRA-registered firms & brokers should communicate with the authority concerning all crypto-related activities, including the “purchase, sales, or executions transactions” done in crypto assets, investment in crypto-focused pooled funds, as well as investments in derivatives tied to crypto.

More Regulations on Crypto?

The FINRA’s request is coming at a time when the regulation of crypto assets is a hot button issue in Washington. All eyes have been on the crypto industry since Facebook announced Libra. Following the litany of criticisms that the social media giant has endured for this move, many have ridden on this wave to call for regulations on the crypto industry.

This has led to a rallying cry from both sides of the divide but those who oppose cryptocurrencies have been the loudest. From financial experts to lawmakers, everyone has an opinion about why cryptocurrencies should be put on a long leash.

Even President Donald Trump spoke about cryptocurrencies for the first time, though it was nothing positive. Trump had tweeted that he wasn’t a fan of digital assets, highlighting their volatility and susceptibility to criminal activities.

Echoing the thoughts of his boss, U.S. Treasury Secretary Steve Mnuchin alluded to Mr. Trump’s concerns in a press conference, “This is indeed a national security issue. Cryptocurrencies such as Bitcoin have been exploited to support billions of dollars of illicit activity like cybercrime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking.”

Mnuchin’s comments suggested that the United States government might be looking to regulate digital assets and that the regulatory steps might not be palatable for crypto investors or companies within the industry. The FINRA’s request is also somewhat peculiar, given that it seems to be failing at the regulatory compliance task that was assigned to it. Earlier this month, the authority, along with the U.S. Securities and Exchange Commission (SEC), published an announcement detailing the difficulties they’ve encountered with ensuring regulatory compliance with crypto custody services.

In the announcement, the agencies revealed that they’ve yet to discover instances where crypto custody services could comply with the SEC’s Customer Protection Rule. In addition to that, they expressed doubts over the ability of a custody service to prove that it controls the assets it supposedly holds, as well as their ability to reverse unauthorized transactions.

Companies would most likely be inclined to comply with its request to disclose any current or prospective crypto activities, but there’s also a question of why it wants this information in the first place, and what it intends to do with them.

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Bitcoin Whales Mopped Up 450,000 BTC During Crypto Winter

When the crypto winter came, it caused a ripple effect that numerous companies still feel to this day. However, it would seem that it also provided incentives for multiple institutional investors to ramp up their investments.

In a report published earlier this week, blockchain and cryptocurrency research firm Diar revealed that Bitcoin “whale” wallets have been able to accumulate up to 450,000 Bitcoin (BTC) over the past nine months, particularly during crypto winter.

Crypto Winter

For better reference, “whales” is the term used to reference individual- and sometimes, corporations- who own significant portions of a cryptocurrency. Diar describes whales as investors who hold between 1,000 to 10,000 BTC in custody.

However, the report does exclude Coinbase-controlled addresses because, as the firm notes, the crypto exchange was behind the creation of some of these whale wallets when it overhauled its cold storage system.

As the report notes, these individuals hold over 26 percent of the total BTC in circulation- worth a reported $36 billion. For better comparison, the firm notes that as of August 2018, when Bitcoin held the same $8,000 price tag that it hovers around today, these whales held just under 20 percent of the total currency supply.

Crypto winter spurred institutional investments

It’s worth noting that Bitcoin continued to crater in the months following August, reaching its lowest point of about $3,200 on December 25. However, even the crypto winter hasn’t stopped these whales; within that time, they’ve gone on to accumulate an additional 7 percent of the total Bitcoin supply.

These private, non-institutional cryptocurrency investors have been holding Bitcoin at massive rates, but as the firm explains, they’ve not been keeping their assets on exchanges.

Diar writes, “Bitcoins held by major addresses – mostly of which are exchanges – have seen an exodus of over 300K Bitcoins since the start of 2018. At peak, these addresses held 750,000 more Bitcoins than they do today, 21% of the total circulating supply versus 16% today.” The research firm notes that over 100,000 Bitcoins have moved into this bracket, amounting to about 40 percent of the Bitcoins minted this year alone.

It added, “Since the start of the bear market in January 2018. Since then, 955k Bitcoins have been minted through inflation as a reward to miners. For the same period, firm size addresses have slurped up half the new market supply.”

Over 300 Investors hold 33 percent of Ether

The trend isn’t just peculiar to BTC. Earlier this month, cryptocurrency intelligence firm Chainalysis published a report which revealed that just 376 individuals hold a staggering 33 percent of the total Ether (ETH) in circulation.

The report, which was titled “The Economic Impact of Whales on the Market,” defined “whales” as the top 500 shareholders within the crypto industry. However, in a way somewhat similar to Diar, Chainalysis also excluded crypto wallet providers, exchanges, and other asset-dealing service providers from its analysis.

Chainalysis claimed that 124 services make up for the top 500 ETH shareholders, while the remaining 376 were individual investors. These individuals were reported to control 33 percent of the world’s ETH supply; down from the 47 percent reported in 2016.

However, the report did also point out that these whales only account for 7 percent of the currency’s economic activity.

In part, the report reads, “Whales consistently hold 25-40% of the circulating supply of Ether, but only account for between 5% and 18% of economic transaction volume. This is because most of the whales (~60%) are holding their assets or not regularly trading with exchanges.”

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Report Exposes Security Vulnerabilities in WalletGenerator’s Key-Generation Process

According to a report published by Harry Denley, a security researcher for wallet provider MyCrypto, there has been a mismatch in the security keys used by paper wallet creator WalletGenerator. The post revealed that WalletGenerator had been deploying faulty codes as far back as August 2018, before patching the bug on May 23, 2019.

Wallet Generator

Deterministically-generated keys

The report clarified that ideally, the site should have an open-source code that is available on GitHub, and the keys generated on the website’s live version should be generated randomly.

However, after testing the live code, certain discrepancies were noticed between the public and private keys- most significantly, the fact that the platform was handing out identical private keys to multiple users.

Denley and his team of researchers went on to test the website using the “Bulk Wallet” generator, and they discovered that after 1,000 key-generation efforts, the GitHub version of the site returned 1,000 unique keys. However, the keys returned by the live code were just 120. These results were sustained, even after the team changed their VPNs and browsers used to run the test.

Move your funds now

The researchers decided to contact WalletGenerator about the potential vulnerability, and while the latter didn’t seem interested in their claims, Denley noted that the problem seemed to have been patched.

Denley went on to recommend that all WalletGenerator users who created their wallets after August 17, 2018, should move their funds to other platforms for the security of their funds, adding that while it seemed that the issue had been rectified, there’s always a possibility of it being re-introduced. At press time, WalletGenerator is yet to issue a statement on the issue.

While a report such as this could serve as an indictment of paper wallets, it’s worth noting that hardware wallets- their chief alternatives- aren’t so secure as well.

Ledger exposes Trezor

Earlier this year, hardware wallet provider Ledger published a report where it detailed vulnerabilities in the devices manufactured by Trezor, one of its chief competitors. According to the study, the vulnerabilities were discovered by Attack Lab, a department at the firm which launches attacks on devices owned by the company and its competitors to identify weaknesses.

Ledger revealed issues with the Trezor One and Trezor T wallets, such as the presence of a backdoor protocol, which would allow would-be imitators to make fake, malware-infested devices. Other vulnerabilities include the possibility of stealing confidential information right from Trezor’s devices, as well as sub-standard counter-attack measures contained in the crypto library of the Trezor One device.

In a rebuttal statement, Trezor pointed out that none of the weaknesses discovered by Ledger were critical to the hardware wallets themselves. According to the company, it was impossible for any of the vulnerabilities to be exploited remotely, as the would-be attackers would require “physical access to the device, specialized equipment, time, and technical expertise.” Trezor pointed out the result of a survey done in association with crypto wallet Binance, which revealed that 66 percent of users believe that remote wallet attacks are the main problem.

In addition, Trezor highlighted that a $5 wrench attack– a form of theft where a user is compelled to disclose his password- can’t be prevented by the manufacturer’s hardware barriers. Regardless, the probability of attacking a Trezor wallet is still relatively small.

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Wall Street Veteran: Bitcoin is Better Investment Option than S&P 500

On Wednesday, Mark Yusko, founder, and partner at Morgan Creek Capital Management, made an appearance at CNBC: Fast Money, where he laid out his claim that Bitcoin is a much better investment option than traditional stocks as of this point.

Yusko is actually quite popular in the stock industry, particularly for correctly predicting the sell-off in stock that occurred in 2018. In this interview, he expressed his belief that the stock market is already witnessing another bear market, and things could get considerably worse as time goes on.

As a result, he went on to endorse Bitcoin (BTC) as a surer investment portfolio at the moment.

Bitcoin Price Gain

Speaking on his conclusion, he added, “I even wear my Bitcoin tie today for you guys. I was on this show back in December when it was $3100, and you said, ‘What do you think?’ I said, ‘Look. We’ve issued the Morgan Creek Digital crypto challenge, we will take Bitcoin over the next 10 years, starting on January 1st, and we will take anybody who wants to take the other side.’ It was a $1 million charity bet, just like the Buffett style bet. We got no takers.”

Pomp’s Bold Claim Pays Off

The bet that Yusko was referring to is the “Buffett Bet 2.0,” which was issued by Anthony “Pomp” Pompliano, his partner at Morgan Creek Capital, last year. While speaking with CNBC in December, Pompliano announced the challenge, saying that he was willing to wager $1 million on the fact that Morgan Creek’s basket of digital assets would outperform the S&P 500 over ten years, starting from January 1, 2019.

He famously invited anyone who was willing to stand on the other side of such a bet, saying that it would most likely be someone bullish on the S&P 500, or who believes that cryptocurrencies are worthless.

Yusko’s Right Again

In the latest interview, Yusko went on to point out that not taking that bet turned out to be the best thing for any would-be takers, as “while BTC is already up over 100 percent this year, the S&P is only up 14 percent.” Yusko’s comments were surely not wrong.

BTC held a price of $3,744 as of January 1, while its unit price at press time is pegged at $7,601. That’s an increase of 103 percent (according to data from CoinMarketCap).

On the flip side, the S&P 50 closed at 2,510 points on January 1, while the closing value as at May 22 was 2,856, marking a growth rate of 13.8 percent since the turn of the year (per data from the CNBC Index). If you thought about betting against Pomp, you’d be pretty much in the hole already.

After pointing out this disparity, Yusko added, “I think going forward from here, even over the next year, over the next 10 years, it’s not going to be close. Bitcoin is a great diversifying asset, it has a very low correlation, it should be in anybody’s portfolio.”

Morgan Creek’s Crypto-Loving Partners

Pompliano recently had to come out to make a point about cryptocurrencies. Last Tuesday, he was a guest on CNBC’s Squawk Box, where he engaged in a somewhat heated argument with Kevin O’Leary, chairman of investment firm O’Shares ETFs

O’Leary wasted no time in trashing Bitcoin, going as far as calling is “garbage” and “useless.” Despite the noticeable uptick in its prices last week, Bitcoin didn’t seem to impress the investor. He questioned the value of Bitcoin, claiming that it is “basically a digital game” without any intrinsic value.

In his defense, Pompliano pointed out that that Bitcoin was going through a bit of a rough start, just as it is with every other disruptive technology in the world. He added that currencies work with a “belief system,” and BTC is functioning as money.

“So, for the US dollar, the only reason you and I use it is because we believe it has value. So I give you a dollar, and you give me a good or service in exchange. Bitcoin has value because the two people who exchange it believe it has value. And what we’re seeing is the volume, look at people using it,” he confirmed.

The post Wall Street Veteran: Bitcoin is Better Investment Option than S&P 500 appeared first on Blockonomi.

Firefox Latest Update Comes with a Cryprojacking Prevention Tool

Earlier this week, open-source Internet browser Firefox released a browser upgrade called Firefox Quantum, which according to a blog post by the company, is much faster and could put an end to the persistent issue of cryptojacking. The company’s blog post, which was published on Tuesday, revealed that Firefox Quantum comes with a new privacy toggle which helps users protect their computers against cryptojacking bots.

Firefox

“Based on recent testing of this feature in our pre-release channels last month, today’s Firefox release gives you the option to “flip a switch” in the browser and protect yourself from these nefarious practices,” the post reads.

Crptojacking works in different ways. One popular way is through phishing emails which install the cryptomining code on your system. Once installed, the scripts use your computing power to mine cryptocurrencies. The other means is through a web browser. This happens when hackers inject a script into an ad or on multiple websites. Once the victim visits the site, their system becomes infected

In order to combat the cryptojacking issue, Mozilla (the company behind the Firefox browser) partnered with Disconnect, an online privacy protection company, to develop a crypto mining blocker for Firefox Quantum. When a user switches the feature on, prospective cryptojackers would be unable to launch their bots and take advantage of the user’s computer power for their mining gains.

The addition of a cryptojacking-blocker was initially announced by Mozilla last year. In addition to that, Firefox Nightly 68 and Beta 67 versions, which were both launched earlier this year, also have the cryptojacking protection feature as well.

Curbing Cryptojacking Bots

The menace of cryptojacking is one that has plagued crypto investors and web browsers. For most of these businesses, sanitizing users on the risks associated with cryptomining and publishing regular updates has been their way of curbing the issue.

Mozilla had warned its users about the increasing popularity of cryptojacking bots in the past, explaining that some websites have the ability to deploy scripts which launch crypto mining software on a user’s computer without the user’s consent or awareness. As this software continues to increase in popularity, so does the attacks.

In the 2018 Mid-Year Update published by integrated security management firm Skybox Security, it was revealed that cryptojacking contributes to about 32 percent of cyber attacks for the first half of 2018.

Fewer Attacks in 2019

However, it also seems that they might have ceded this majority to ransomware and hackers. Last month, cybersecurity firm MalwareBytes revealed in a report that there has been a sharp decline in consumer-targeted cryptojacking since the turn of the year.

The report claimed a 40 percent decrease in consumer malware detections, although cryptojackers could have turned their focus on businesses. Higher processing power means a shorter time to mine cryptos. Firefox is not leaving anything to chance, either way. Starting with Firefox Quantum, the company expects cryptojackers to have things a bit difficult.

Other forms of cyber attacks are being addressed as well. Last month, global payment processor PayPal was awarded a patent for a new technique of combating ransomware attacks by the U.S. Patent and Trademark Office.

Essentially, this technique will detect the original copy of a piece of content that has been corrupted by ransomware. It copies this content and makes it available to the user, even while a modified version of it might be locked away.

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Months After they Were Stolen: Cryptopia Funds Are Still On the Move

New Zealand exchange Cryptopia might have been hacked almost 5 months ago, but new information continues to unfold. Cryptopia’s hack is particularly interesting, thanks in no small part to the numerous details and developments that have come out since the event itself.

Now, there’s a new twist to the seemingly never-ending tale. The funds have been transferred again.

Cryptopia Hack

Tokens on the move

Following the liquidation order and the halt that was put on all trading activities on the platform, it was recently reported that the hackers who stole funds from the New Zealand-based crypto exchange had begun moving funds into separate wallets.

The discovery was made by CoinFirm, a cryptocurrency tracking, and analysis firm. It started with a tweet from AMLT Token & Network, in which it was revealed that some of the ETH tokens stolen from Cryptopia still remains on the attacker’s address.

Following that tweet, CoinFirm added that 10 ETH tokens (worth about $2,510 as at press time) had already been moved from the address and into addresses housed on some major exchanges- including two which were found to have been linked with Huobi.

Grant Blaisdell, an official at CoinFirm, said, “The Cryptopia hacker moved 30,790 ETH (~$7.67M) from the last red address to the yellow one which is a new address of the hacker as of May 20, 2019, at 01:43:57 AM +UTC. The yellow address still has got 29,770 ETH.”

In addition to those addresses, two other addresses were reported to have received a total of 1010 ETH (worth $253,510 as at press time), while 10 ETH was sent to what seems like an address on Japanese exchange Huobi, before making their way to a Huobi hot wallet.

Millions moved in January

For a quick recap, Cryptopia was hit with two separate hacks back in January 2019. In a tweet on January 15, the exchange revealed that it had been the victim of a “security breach” the day before, and that “significant losses” had already been incurred as a result of the breach.

While the extent of the losses was still unknown, a tweet from Whale Alert revealed that 19,391 Ether (ETH) tokens (worth about $2.4 million at the time) were transferred suddenly to a wallet.

A separate tweet by the firm also revealed that 48 million Centrality (CENNZ) tokens (worth $1 million at the time) were transferred without authorization as well.

The hackers came back for more

However, despite multiple investigations and efforts to retrieve users’ funds, little progress was made

Then, on January 20, a report by blockchain data analysis firm Elementus revealed that a second raid on Cryptopia had resulted in the theft of ETH and ERC 20 tokens worth about $16 million.

The report, which was titled “Some overdue transparency on the Cryptopia attack,” revealed that the hackers’ second raid affected a total of 17,000 wallets on the exchange.

It also claimed that the unsanctioned token transfers were effected from two separate hot wallets; one held ETH, while the other supposedly held other tokens listed on the exchange.

However, the firm also noted that the report only considered transfers effected on the Ethereum blockchain. When the number of tokens taken from other blockchains is considered, there’s a high probability that the funds stolen would have been much higher.

Concluding, Elementus noted that while the hackers had been working double-time to move their loot to various exchanges- such as Binance, Bitbox, and Huobi– and cash them out, a large percentage of the funds- about $15million- had not been withdrawn at that time.

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Report: Trading Volumes on the Rise on Centralized Exchanges

Cryptocurrency companies looking to steal some bragging rights finally have something to make reference to, as a new report has provided an insight into some of the exchanges, derivatives, and assets that had impressive results in April.

Per reports from crypto data analyst CryptoCompare, in its April 2019 Exchange Review, trading volumes for the top crypto-to-crypto platforms increased by 57%, while the monthly volume for fiat-to-crypto exchanges increased by 85%. Some of the exchanges leading the pack include Bithumb, Upbit, and Bitfinex—who is entangled in a legal battle with New York regulators.

Day Trading Cryptocurrency

iFinex withstands legal issues

The report from CryptoCompare revealed that both Bitfinex and Tether Limited are doing quite well for themselves; much to the pleasure of iFinex, the handler and parent company of both institutions.

Bitfinex was able to climb up to third place amongst fiat-to-crypto exchange by monthly trading volumes, beating names such as Coinbase, Bitstamp, and Kraken. With $6.7 billion, it trailed only Bithumb ($17 billion) and Upbit ($8.7 billion). Tether (UDT), the stablecoin developed by Tether Limited, also held firmly to its place amongst fiat-backed currencies, as the report revealed that BTC-USDT trading represented 78.9% of total trading volumes (across fiat or stablecoin).

The BTC-USDT trading pair was also reported to have made up for a staggering 97.9 percent of Bitcoin-to-stablecoin trading as well. For a little over three weeks now, Bitfinex and Tether Limited have been in a legal battle with the Office of New York’s Attorney General (ONYAG).

It all began with a filing from the ONYAG, which claimed that Bitfinex was able to tap into its Tether reserves to misappropriate as much as $850 million and use these funds to cover up an unreported hack or some other form of mismanagement by Crypto Capital, its payment processor.

Both organizations have made a legal filling of their own, with each one singing pretty much the same song all through. The ONYAG believes that an investigation into the operations of all parties is required in a bid to protect their customers, and the office already called for an injunction to stop Tether and all “affiliated parties” from accessing their reserves.

At the same time, both Tether and Bitfinex have claimed that such an investigation is simply beyond the ONYAG’s legal authority. While a resolution to this case is still largely anticipated, it would seem that both companies were able to leave April with their stats unscathed. It’s still uncertain how they both will fare in May.

GBIT’s comeback rolls on

Another significant finding was that the Bitcoin Investment Trust (GBIT), which was created by Grayscale Investments is growing in popularity. According to CryptoCompare, GBIT ranked second amongst Bitcoin institutional derivatives, as it saw a 239 percent increase in average daily volumes of $29.7 million.

This trailed only the Bitcoin futures offering from American financial services company CME Group, whose average daily volume was pegged at $256 million, marking an even more impressive 263 percent increase.

Grayscale recently reported that it had seen a massive influx of institutional investors over the past quarter. Inflows from hedge funds into the GBIT were reported to have increased by 2400 percent, as the Trust went from holding less than $1 million to $24 million within a quarter.

However, while Grayscale seems to be soaring, the CME Group has been struggling of late. The company reported a 17 percent fall in net income over Q1 2018, as its earnings stood at $497 million.

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World Bank and CommBank Launch the First Blockchain-Based Bond

On May 15, the World Bank published a press release which stated that it had partnered with the Commonwealth Bank of Australia (CommBank) to enable blockchain-based secondary market bond recording.

The secondary trading project was performed on the Blockchain Operated New Debt Instrument (bond-i), a platform based on the Ethereum blockchain. It was reportedly developed by CommBank’s Blockchain Centre of Excellence at the CommBank’s Innovation Lab in Sydney as part of the global banking institutions mission to explore and build on the potential of distributed ledgers.

World Bank

A year in the works

Just last year, the World Bank issued the bond-i, claiming that it was created, allocated, and managed with the use of blockchain technology.

At the time, CommBank was the sole arranger of the bond. It ended up making the World Bank a staggering AUD 110 million ($81 million), thanks to the contribution of investors such as financial services company Northern Trust Bank, the New South Wales (NSW) Treasury Corporation, and QBE Insurance Group Limited, Australia’s largest global insurer.

The press release at the time, stated that the World Bank made $50 – $60 billion in yearly bond issuances every year in its bid to improve global market sustainability and mitigate poverty. The bond was further described as a milestone that would help put them in a much better position to advise countries on the risks and opportunities of disruptive technologies, especially concerning the institution’s Sustainable Development Goals.

The World Bank sees the bond as the first step in the process of moving bond transactions from manual procedures to faster and quicker automated ones.

Lots of love and potential for more projects

Per the recent release, the World Bank declared that since bond-i was launched, both the project and the Bank have gotten support from numerous players within the global financial and technology sector.

Sophie Gilder, Head of Experimentation & Commercialization, at the CommBank’s Innovation Labs, said, “There is a growing recognition that blockchain technology can deliver a superior digital market for raising capital and then managing and trading securities, so we are working with our strategic partners to realize that vision. Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”

The World Bank’s pursuit of understanding

The World Bank does seem to be heavily invested in pursuing a deeper understanding of blockchain technology. Earlier this year, a report published on The Financial Times revealed that the World Bank and the International Monetary Fund (IMF) had come together to launch a private blockchain network as a means of studying the technology and its potential.

In addition to the private blockchain, both institutions were also alleged to have developed an asset, and while it wasn’t called a cryptocurrency, it sure looked and functioned like one.

The report called the asset a “Learning Coin,” and claimed that it was based on their joint blockchain network. However, while it seemed like a cryptocurrency, the report maintained that it was fundamentally different.

For one, the asset isn’t tied to any known fiat currency, and it doesn’t have any monetary value. It was reported to only be intended for use within the World Bank and the IMF as a tool for their staff to help uncover more about blockchain technology, with an emphasis placed on its underlying feature with digital assets.

As such, the con and all its properties would only be accessible to World Bank and IMF staff.

Both institutions were also said to have developed an app to help accompany the use of the Learning Coin. It was reported to be a research-assisting tool, which would help provide and develop learning apparatus like videos, research papers, and presentations.

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Ryuk’s Prominence is Driving Increased Crypto Ransomware Profitability

Earlier this week, cryptocurrency ransomware manager Coveware published a report on its official blog, revealing a staggering 90 percent increase in the incidence of ransomware payouts in the first quarter of 2019.

For easier reference, ransomware is a form of computer malware that takes control of a host computer and leaves the user locked out. All access to the computer is completely cut off, and information stored on the computer’s hard disk remains inaccessible till a ransom is paid.

Ransomware

Things are getting worse. Blame Ryuk

The report, which the company claimed was based on standard, real-time data, touched on the costs involved in a ransomware attack. The recovery costs (including any ransom paid to the attacker in order to avert the hack) and downtime costs (losses suffered as a result of the attack, usually measured in missed revenue opportunities and time lags).

Coveware’s analysis went on to reveal that the average ransom paid to ransomware attackers was pegged at $12,762 for the first quarter in 2019. This figure represents an 89 percent increase from the $6,733 reported in the company’s Ransomware Marketplace Report for Q4 2018.

The increase was mainly attributed to the rise in popularity of ransomware such as Ryuk, Iencrypt, and Bitpaymer; three of the recent malware developed and deployed in attacks on large corporations.

Richer victims, larger loot

The average ransomware downtime (the time needed to decrypt ransomware) increased to 7.3 days in Q1 2019. This is about 15 percent higher than the 6.2 percent reported in Q4 2018. Essentially, this means that ransomware attackers deployed more difficult-to-decrypt malware in 2019. The estimated downtime costs per ransomware per company was also revealed to be $65,645.

The report revealed that Dharma, GandCarb, and Ryuk were the three most popular types of ransomware. However, the emphasis was laid primarily on Ryuk, as it has seen the highest increase in adoption levels amongst the top three. Decryption difficulty was pinned to be the single most prevalent cause of increased downtime, and Ryuk was highlighted to be one of the most challenging ransomware to decrypt.

The professional services industry (which includes companies such as accounting agencies and law firms) was reported to be the most commonly-attacked ransomware victim. Even though they hold some highly valuable information (case files, tax records, account and banking details, settlement terms, etc.), these firms were reported to be notorious for under-investing in It security infrastructure. So, they’ve become easy prey for ransomware attackers.

The average company size of ransomware victims increased from 71 employees in Q4 2018 to Q1 2019. This increase, as well as the estimated downtime cost, was also attributed to increases in Ryuk adoption. The ransomware is known for attacking mid-market and large enterprise with more capital and higher employee counts.

PayPal raises some hope

However, while all of this paints a gloomy picture for cybersecurity, there seems to be hope on the horizon.

Earlier last month, global payment processor PayPal filed a patent with the United States Patent and Trademark Office (USPTO) for a product which will help with the real-time detection of ransomware. The patent’s filing described a “technique for ransomware detection and mitigation,” and it will primarily detect the original copy of files and content on the host computer’s hard drive and collect the information.

With the product, a user targeted in a ransomware attack would still have access to the original copy of the content, even if the ransomware already blocked access to the “altered version.” As the product hasn’t been released to the public yet, it is impossible to tell how it will fare against ransomware such as LockerGoga, Ryuk, and Dharma—the main culprits responsible for the increased profitability of ransomware attacks.

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Facebook’s Latest Hiring Spree Stirs More Speculation About its Cryptocurrency

Facebook’s hiring spree continues as speculation about its digital currency continue to rise. The social media giant has reportedly tapped two former members of the executive at crypto exchange Coinbase, both of whom will now serve as compliance officers.

Facebook

More Pros heading to Facebook

The first Facebook hire is Mikheil Moucharrafie. Mikheil worked at Coinbase for about four years, holding positions such as Risk Manager, Compliance Manager, Support Analyst and Quality Assurance Tester, and Anti-Money Laundering (AML)/ Bank Secrecy Investigator.

He shared the news of his departure via a post on his LinkedIn account about three weeks ago, stating that he’d take a vacation before returning to work. Going by the current description on his profile, it would seem that his leave was a rather short one, as he now works as Compliance Officer at Facebook.

In addition to Moucharrafie, the social media giant also hired Jeff Cartwright. Cartwright is a compliance and regulations expert, who worked at Coinbase for 5 years. In that time, he held roles such as the Head of Internal Audit, Compliance Manager, and Director of Regulatory Risk and Examinations.

However, before he joined Coinbase, Cartwright had also picked up some valuable industry experience, working at audit firm KPMG, financial service provider American Express, and banking institution Goldman Sachs as an AML expert.

According to his LinkedIn profile, Cartwright will be working as a Policy and Compliance Manager at Facebook. Both men are widely expected to help implement and maintain the highest safety and compliance standard at the company, especially as its rumored digital asset seems to be nearing launch.

Facebook’s Superstar Blockchain Team

Facebook’s blockchain efforts, although kept mainly under the radar, have been documented extensively. David Marcus, the former President at payment processor PayPal, was hired by the company to serve as the head of its Messenger platform.

However, last May. Marcus was reassigned by the company to head its new blockchain research team. As he was also a former member of the board at Coinbase, the company deemed it fit to entrust him with the role.

Since Marcus’ appointment, however, Facebook has gone on a blockchain hiring spree. The company posted five job openings for blockchain developers on its LinkedIn account, with titles such as growth product manager, business operations manager, software engineer, data scientist, and product manager.

The company also opened a vacancy for a Lead Commercial Counsel, who will guide the rollout of new blockchain and crypto-related offerings. With all of these hires, Facebook has been beefing up its blockchain team, and it is hoped that its rumored digital asset will be worth the wait.

The rationale for the hires is also quite understandable. A company of Facebook’s size launching a digital asset is a massive development by all standards, and given the company’s user count, it is only expected that all hand will be on deck to ensure safety and regulatory compliance.

The Privacy War

Given its history with information handling and user privacy, it’s only right for anyone to be concerned.

On May 9, the United States Senate Committee on Banking, Housing, and Urban Affairs wrote an open letter to Facebook’s CEO Mark Zuckerberg, asking about how the company was looking to handle privacy concerns with its cryptocurrency project, which it dubbed “Project Libra.”

Questions raised by the Committee included how the asset will work, the company’s existing privacy measures, the type of customer information in its possession, the company’s level of correspondence with financial regulators as regards the asset, and whether they had shared any information with “unaffiliated third parties.”

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Tron’s CTO Abandons Ship to Start a New Blockchain Company

Lucien Chen, co-founder and Chief Technical Officer of blockchain firm TRON (TRX), has announced that he will be leaving the firm.

Chen announced his resignation from the firm in a Medium post titled “Why should I rebuild a new TRON?”. According to the post, Chen decided to leave the company because the network itself has somewhat deviated from the original purpose.

Everything is different

His post reads, “Because of the irreconcilable contradiction between us, TRON is no longer the original TRON. The reason for leaving is very simple. As a technical man, I feel very sad that the TRON has departed from the faith of ‘decentralize the web’.”

While Chen’s period with the company has seen its currency grow into one of the largest in the world by market capitalization (per data from CoinMarketCap). However, notwithstanding, Chen states that he needs to leave because the platform has become excessively centralized.

Centralization problem

Chen pointed out the fact that there’s a centralized voting problem in TRON’s Delegated Proof-of-Stake (DPOS) consensus and Super Representative node. He highlighted that there are some nodes which have more votes, even though their voter counts are significantly lower. He added, “. Therefore, the vote of ordinary retail investors has completely fallen. The total number of TRX in TRON is 100 billion, while the total number of votes for the super representatives is just less than 8 billion.”

He also repeatedly highlighted that TRON’s relation with the Internet has changed, as the company itself seemed to have deviated from the purpose of the blockchain. Apart from its excessive centralization, he believed that the company’s technology platform- which he helped build- is still not able to cater to any real-world applications.

In part, he said, “Even the community is organized under centralization. No diverse voices in TRON ecosystem. The whole project has developed into a monetary tool without any “decentralize the web” spirit.”

The sentiment here is pretty simple; the fact that everyone on the platform seems to agree with how it is being operated isn’t a sign of diversity.

TRON is no longer about innovation

Take the Bitcoin Cash (BCH) hard fork (as well as all the other hard forks that can be traced to Bitcoin itself ) as an example. These hard forks led to versions of Bitcoin that were “ideal” in the eyes of their developers. Essentially, Chen believes that Justin Sun, TRON’s CEO, has focused more on making money with the platform that actually fostering innovation.

Yet another deviation from the objective of the blockchain. Going forward, Chen revealed that he would be working on his own blockchain, which he dubbed the Volume Network (VOL). Chen touted his network, claiming that it will be a truly decentralized blockchain project. Chen claimed that through the VOL, he would be able to achieve true decentralization by implementing the mining methods with the least threshold.

He said, “At present, the high threshold of ASIC and the high price of GPU make many people hesitate to mine. This kind of project, which eliminates subsequent players from entering the market, is unsustainable. I want miners and newcomers to use a new generation of hard drive mining method, and still get a safe and reliable digital currency while storing ‘useful’ files.”

He also described the network as a community project, stating that he took $1 million with him and a $30,000 valuation to pilot the community and attract more users as time goes on. The news of Chen’s departure didn’t seem to affect the value of TRX much, as it was still trading slightly above where it began for the week. However, for all the hype that Chen has placed on the VOL, it is sure worth keeping an eye on it to see how it performs.

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Experienced Crypto Investor Loses Life Savings of $1.5 Million in High Yield Bitcoin Scam

A local Jersey investor has been scammed of his life savings to the tune of $1.5 million, per reports from the Jersey Evening Post. According to the post, the man- whose name wasn’t provided- was promised as much as 1500 percent returns on his investment. Such returns, given his investment, would have made him a killing. Of course, it’s understandable that he would have fallen for such a scam.

Jersey

Even experience doesn’t count

According to the post, the man was scammed over an 18-month period, being gradually milked out of his entire life savings. However, while substantial crypto scams such as this are definitely not news, one thing that seems to distinguish this case from a host of others like it is that the victim, in particular, was said to be an “experienced” investor. The fact that he was swindled out of $1.5 million in a scam, even with all of his experience, is certainly ironic.

You’d think that an experienced investor would recognize the qualities of a scam (such as the overly high rate of returns in this case). However, it is also possible that skilled con artists could find a way to work around the safeguards that experience could have instituted in the minds of investors as well.

The victim was reportedly contacted by the scammers after he went online to find out more about Bitcoin. The organization claimed to be operating out of Norwegian territory, although investigators later found evidence of them moving money across various banks all over the world. The scammers tricked this victim into believing that they were offering legitimate Bitcoin-based investments, and over the aforementioned time frame, they continued to trick him into making additional investments.

To add further anguish, investigators from the U.K.’s National Crime Agency reported that there is a slim chance that they will recover the funds he lost. The publication noted that a report on the scam was issued by the Jersey Fraud Prevention Forum the forum encouraged locals of the island to be increasingly vigilant as regards cryptocurrency scams; especially any which might promise excessively high returns.

Mike Jones, the Director of Policy and Risk at the Jersey Financial Services Commission, said, “Following this Islander’s huge loss, we are warning local residents to be extra vigilant when investing in cryptocurrencies or any investment that seems too good to be true and promises high returns with no risk. Always get independent advice from a professional, and make sure the company you’re dealing with is legitimate.”

CFTC issues Warnings on Crytpo Investments

Last month, the United States Securities and Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CTFC) issued a warning to existing and potential crypto investors, encouraging them to be more vigilant in their choice of investment schemes.

In a press release published on April 24, both agencies stated that they’ve come to recognize the rise of crypto scams in which con artists disguise as legitimate cryptocurrency trading businesses and advisory firms, and go on to receive funds from unsuspecting investors with the prospect of investing in crypto-related businesses.

In the release, the watchdogs provided six prominent red flags for illegitimate investment schemes, further encouraging investors to conduct the proper due diligence on any potential investment scheme before releasing funds to it.

The red flags included guaranteed high investment returns, unsolicited offers, jargon-filled documents, and overly complicated terms, continued pressure to invest as soon as possible, and the terms of the deal sounding too good to be true. Both agencies concluded by urging potential crypto investors to check the Investor.gov site to look up the license of any investment operators in the government database. Any vestment that isn’t registered and listed on here is most likely a scam.

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Court Orders a Look Into Craig Wright’s Bitcoin Holdings

In a new twist to an old case, Craig Wright, Chief Scientist at blockchain research and development firm nChain and the self-acclaimed Bitcoin (BTC) creator Satoshi Nakamoto, has been ordered by a federal court to list all of his public Bitcoin addresses.

Last week, the United States District Court of the Southern District of Florida issued an official order telling Wright to provide a list containing all of his public BTC addresses. The order is coming as part of an ongoing case between Wright and the estate of David Kleiman, a deceased computer scientist who, at a point, was a partner of Wright’s.

Litigation

Kleiman v. right: A recap

The Kleiman v. Wright case is one that has been going on for about a year now. Wright was sued by Ira Kleiman, David Kleiman’s brother, who claimed that the scientist stole over 1.1 million BTC tokens (worth about $5.6 million at the current rate) and intellectual property when he worked with David. As at the time the suit was filed, the tokens were worth about $5 billion.

David Kleiman and Craig Wright admittedly worked for a brief period. However, when Kleiman died from Methicillin-resistant Staphylococcus aureus (MRSA; a bacterial infection) in 2013, Wright approached his family and offered to help them to liquidate the deceased’s Bitcoin holdings.

The Kleiman family, led by Ira, requested in their February 2018 suit, that Wright should provide fair compensation for all of the intellectual property he stole from them, as well as a substantial portion for the BTC tokens he took as well.

Wright filed a motion to get the entire case dismissed, with his attorney arguing that it was a “thinsoup of supposition, speculation, conflicting allegations, hearsay and innuendo.” The scientist’s attorneys also dismissed the case as no more than an attempted shakedown designed to steal Wright’s fortune and intellectual property.

However, the motion was denied by a South Florida District Court judge. In its documents, the court claimed that the plaintiff’s claim for conversion was sufficient, and thus, “survives Defendant’s Motion to Dismiss.”

What this order entails

The new court order illustrates some of the plaintiff’s requests. The family asked the court to force Wright to reveal all the public Bitcoin addresses in his possession as at December 31, 2013, make him identify all of the tokens that were sent to a particular blind trust back in 2011, and provide relevant documents related to the trust in question.

In addition, Kleiman’s family also asked the court to order Wright to identify the trust’s current and past trustees. This, as the order states, will help in conducting further depositions of Wright as regards the Bitcoin tokens in his possession.

According to the order, Wright had previously filed a motion to keep information regarding his Bitcoin holding sealed. However, citing general policies of accountability and disclosure, the court rejected Wright’s motion.

Now, Wright has until 5:00 pm EST on May 8 to identify the blind trust in question, as well as provide information concerning its whereabouts and both its past and present trustees. A deadline of 5:00 pm EST on May 15 was also set for Wright to produce all of the trust’s transaction records, “including but not limited to any records reflecting the transfer of Bitcoin into the blind trust in or about 2011.”

All wrong, no Wright

This case’s progression continues a contentious year for Wright, as Bitcoin Cash SV (BSV) a digital asset which he promotes and favors, has been delisted from a number of popular crypto exchanges, including Binance and Kraken.

Following Wright’s behavior and public dispute with Hodlnaut (a Twitter user who criticized Wright for claiming to be Satoshi Nakamoto), BSV has continued to receive little appreciation from the crypto community. At press time, the currency is trading at $52.43, down 3.07 percent over the last 24 hours (per data from CoinMarketCap).

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Report: Facebook is Pitching its Crypto Stablecoin to Potential Investors

The rumors concerning Facebook’s reported development of its cryptocurrency are back, along with financial details. Per a Wall Street Journal report, the social media giant Facebook is now in talks with partners, as it seeks to seal investments for the rumored digital asset.

Citing familiar sources close to the company, the Journal reports that Facebook is discussing with tech firms and financial service providers like VISA, First Data Corp and MasterCard about investing in the stablecoin, which for now has been dubbed “FB Coin.”

Facebook Blockchain

The Journal’s post also added, “Facebook is also talking to e-commerce companies and apps about accepting the coin, and would seek smaller financial investments from those partners.”

A timeline: Facebook reaches another milestone

As stated earlier, rumors about the stablecoin have been swirling for some months now. The first report of Facebook’s entry into the crypto space was reported by Bloomberg on December 21. The news outlet had claimed that Facebook’s new digital currency would help facilitate crypto-based transfers within its suite of messenger apps- including Messenger, WhatsApp, and Instagram.

The FB Coin, if introduced, could meet the needs of a market comprising of approximately 2.7 billion people.

While the company didn’t make any official statement at the time, Bloomberg quoted anonymous sources who confirmed that it was working on a plan to develop the asset.

As part of its plans,  Facebook went on a hiring spree to beef up its blockchain team. The Palo Alto-based company hired David Marcus, former President of payment processor PayPal, to head its blockchain research team. The tech company was also reported to have discussed its plans with major crypto businesses.

A report by the New York Times, which cited anonymous sources close to the company, claimed that Facebook had advanced its development plans for the “FB Coin” and was now speaking with major cryptocurrency exchange platforms about listing the stablecoin.

Opportunities lie ahead

In light of this new report, it would seem that Facebook is making giant strides with its cryptocurrency. Developing the currency shouldn’t be particularly challenging, given the company’s reach, pedigree, and extensive resources.

As regards listing, the company is also expected to go through that wall unscathed. Most crypto exchanges will list any asset, as long as its meets certain criteria for legitimacy and can comply with industry operation standards.

Again, given Facebook’s pedigree, this shouldn’t be too difficult. The company remains the most popular social media site- and one of the most valuable companies in the world by market capitalization. Its foray into the crypto space will be a massive boost to the nascent industry, and exchanges will be chomping at the bid to list the “FB Coin.”

It’s also worth noting that the aforementioned David Marcus, Facebook’s Head of Blockchain Research, used to be a board member at crypto exchange Coinbase. While he vacated his position due to his current appointment, it wouldn’t be far-fetched to assume that he could be an instrumental player in brokering a potential listing agreement between Facebook and Coinbase for listing the “FB Coin.”

Tread with caution

However, it is also worth noting that Facebook’s history of regulatory compliance might be a sore spot with this project and its listing. In recent times, crypto exchanges have been swift to delist assets which- or whose developers- have behaved in an “unsavory” matter.

Still, it’s expected that exchanges will see a potential “FB Coin” listing as more of an opportunity, even with the social media giant’s checkered history with regulatory compliance.

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London Stock Exchange’s CEO Sees a Future with Blockchain Technology

Nikhil Rathil, Chief Executive Officer of the London Stock Exchange (LSE), has come out to voice his opinion on blockchain technology, which he believes should be adopted extensively as a means of issuing settlements and securities.

Speaking in an interview with news site CNBC, Rathil claimed that adopting blockchain technology in the issuance and settlement processes is a possibility in the future, going on to confirm that certain developments in the fields have intrigued the 300-year old stock exchange body.

“You can certainly see distributed ledger technology having an application in the issuance process. I can see that technology being used in settlement too,” he told the network.

He pointed out that the organization has noticed some strategic moves being made by rival exchanges, and they were monitoring all of these developments to see which ones succeed in gaining adoption from the market and the general public.

By rivals, he was referring to Switzerland’s SIX exchange, which has been quite proactive in the blockchain industry. The Swiss exchange which sees a daily turnover of $5.18 billion with a market capitalization of over $1.67 trillion will run a pilot blockchain integration for its imminent digital asset trading platform SDX soon.

Chief executives warming up to crypto

Rathil’s comments were similar to those of Christine Lagarde, a Managing Director of the International Monetary Fund (IMF). Speaking with CNBC at the 2019 Spring Meetings of the World Bank Group and the IMF in Washington, D.C. on April 10, the IMF Chairwoman praised the efforts of blockchain technology and other technological innovations, placing particular emphasis on their efforts to impact the stability of the global financial system.

Rathil and Lagarde certainly weren’t lying; there have been some notable integrations of crypto into the world of traditional finance in recent times. For instance, despite its CEO Jamie Dimon, a well-known critic of cryptocurrencies, banking giant JPMorgan Chase recently released the JPM Coin to help its customers speed up the processing of transactions.

However, while his statements definitely did show that he is in support of the promotion of adopting progressive innovations in the FinTech space, the stock exchange chief executive was also quick to counsel restraint in the adoption of these technologies as well, adding that a little bit of caution is required due to the advent of some “extreme manifestations” in the crypto space.

His cautions are for good reasons. Since the crypto industry started receiving attention, there has been an upsurge in the rate of hacks, theft, and identity manipulation. On April 30, cybersecurity firm CipherTrace released a report claiming that about $356 million was lost to crypto-related hacks in 2019 alone. The firm predicts that if things continue to move at this pace, 2019 should see about $1.2 billion in total funds lost to crypto hacks.

For proper comparison, researchers from CipherTrace did also project $1 billion in funds lost for 2018. Going by the firm’s findings, asset security remains a sticking point in the adoption of blockchain and its related concepts.

Given how much LSE manages, moving away from the traditional way of operating and switching to the blockchain is a move that might prove too risky for an institution of its sheer size and volume.

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Hackers Used Microsoft Email Addresses to Steal Users’ Crypto Funds

Crypto hackers have turned their attention to Outlook, MSN and Hotmail—three email services owned by tech giant Microsoft. According to a report published on tech news media Vice on April 30, multiple cryptocurrency holders, who were affected by a recent hack, have alleged that the hackers also stole their crypto holdings.

Trouble started when hackers gained access to the account of a customer support employees at Microsoft. Citing an Email from a Microsoft spokesperson, a separate report by TechCrunch revealed that the criminals found it easy to access customer accounts using the login details of the tech company’s login details. What they found was a treasure trove of data which was used to siphon users’ crypto funds.

Cryptocurrency Hack

Complaints from all corners

A Dutch tech forum carried the complaint of a victim, named Jevon Ritmeester, who alleged to have lost 1 Bitcoin (BTC) (worth about $5,200 as at press time) to the attack.

According to Ritmeester, he tried logging into his account on Kraken and upon finding that his account wasn’t accessible, he found that there were several “login changes” notifications in his Email trash compartment. He also found that all Emails that mentioned Kraken were automatically moved to his trash folder. For most crypto investors who haven’t activated a two-factor-authentication (2FA), once a password reset is sent to the mail, the funds are as good as gone.

Ironically, Kraken only just announced that it would be initializing 2FA last month, so it couldn’t have been so difficult for the hacker to have gained access to his Kraken account.

Reddit, a separate forum, also carried various complaints of victims who experienced similar situations. For instance, a user known as Shinatechlabs claimed to have lost “25,000” worth of digital assets as a result of the breach, but he declined to provide further details on how or when it happened.

Microsoft seemed to have missed it

To paper over the cracks, Microsoft did what large corporations do best. They issued a statement to calm fraying nerves. Microsoft sent an initial Email to the affected users, assuring them that critical information was safe. The company noted that, while the hackers got hold of the Email addresses, folder names, Email subject lines, and the Emails that they communicated with, Email content- including login credentials, passwords, and attachments- were out of their reach

However, events that happened since then have shown that this is contrary to the case.  The issue of keeping cryptocurrencies safe online is one that keeps investors and crypto exchanges awake all night. One security measure that is highly recommended is the 2FA, which requires the investor to retrieve a passcode sent to their phone before they can access their cryptocurrencies. The recent cases of sim swapping have shown us just how easy it is to bypass that measure. For a lot of people, storing their funds in a cold wallet with strong private keys is secure enough—not anymore.

The blockchain bandit

On April 23, security consulting firm Independent Security Evaluators (ISE) published a report about the “blockchain bandit,” a cybercriminal who had so far been able to steal up to 44,744 Ether (ETH) tokens by guessing weak private keys. While one might think that guessing a private key correctly is a “one in a million” move, ISE reported that this criminal had been able to guess about 735 private keys, all of which gave him unrestricted access to the accounts of his victims.

Adrian Bednarek, a Senior Security Analyst at the firm, reported that he came across the criminal by accident. He pointed out that as opposed to accessing these accounts by brute hacking, the criminal simply generated faulty random numbers and looked for faulty code.  From there, Bednarek noticed that some of the wallets that were linked to the private keys recorded large debit transactions into a single address.

He predicted that the hack could have resulted from a defect in the underlying codes of the software used in generating them. However, it could also be possible that the hacker used some of the most common passphrases (such as 12345, 0000, abc123, etc.) on multiple private keys and somehow, got lucky.

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Finnish Regulator Assumes Oversight of Local Crypto Companies

Finland’s Financial Supervisory Authority (FIN-FSA) has published an announcement which confirms that it would now be overseeing the registration and operations of the country’s crypto sector. In its announcement, the financial regulator clarified that going forward, it would be in charge of registering all cryptocurrency wallet providers, exchange platforms, and issuers that want to operate within its borders.

Finland

AML laws will take full effect

The watchdog also pointed out the Act on Virtual Currency Service Providers, new legislation that will take effect in the country as from May 1. The new Act was drafted based on the Fifth Anti-Money Laundering (AML) Directive of the European Union. EU’s directive was drafted and implemented in July 2018, establishing a framework and oversight of crypto-based companies within the EU, with the intent of mitigating the use of cryptocurrencies for terrorist financing and money laundering purposes.

In a press release announcing the new AML framework, the EU wrote:

“The 5th Anti-Money laundering directive also increases the cooperation and exchange of information between anti-money laundering (AML) and prudential supervisors, including with the European Central Bank.”

However, FIN-FSA clarifies that successful registration at the national level, even under the new legal framework, doesn’t give a company the right to provide similar services in other EU countries on the basis of registration granted in a member state.

Comply or pack out

Finland’s financial watchdog is not playing around. The agency wants all crypto-based firms to comply with these rules or face the consequences. It has a broad definition of crypto companies, which includes but not limited to those that concern the segregation of assets belonging to service providers and clients, the storage and protection of clients financial assets, and heeding all AML/CFT rules.

To prevent any confusion, the regulator says it would be convening a briefing with all organizations within the crypto industry on May 15.

The briefing will be held at the auditorium of the Bank of Finland in Helsinki, where the regulator is expected to provide information relating to registration deadlines, procedures to follow, as well as timelines for each procedure.

Exchanges are making adjustments

Last month, international peer-to-peer crypto change platform LocalBitcoins announced via a blog post that it would be supervised by the FIN-FSA henceforth. In its announcement, the Helsinki-based crypto exchange revealed that the Finnish Parliament had drafted new legislation that would provide regulatory clarity to cryptocurrencies in the country. The exchange claimed that adopting all of these laws would help boost the public’s perception off cryptocurrencies, while specifically improving Bitcoin’s “standing as a viable and legit financial network.”

In addition to that, the exchange pointed out that it would be developing tools and safeguards to improve its level of compliance with security regulations. The company pointed out that it launched a new account registration process, which would make it easier for new customers to find suable trading partners. It also informed its customers that it would be working on a more robust identity verification process.

An all-inclusive FinTech industry

As stated by LocalBitcoins, regulation by the FIN-FSA will surely improve the public perception of cryptocurrencies and crypto-related organizations. It will also improve the collaboration between crypto-based organizations and traditional financial service providers in the country.

Earlier this year, news platform Bloomberg reported that Parsos Oy, a Finnish crypto wallet and service provider, was on the verge of collapse after various banks reportedly declined to conduct business with it. According to the report, various leading banks in the country, including the OP Group, Saastopankki, S-Bank, and Nordea Bank AB, closed Parsos Oy’s accounts with them, as they were concerned about conducting business with a company in Finland’s then-unregulated crypto market and the prospect of violating any AML law.

Public recognition will help stem instances such as this and provide a proper framework for companies in both sectors going forward.

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So Much for The World’s First Bitcoin Real Estate Project: Aston Plaza in Dubai

It might be a while before you can purchase your home with any cryptocurrency at all. British news agency The Times reported on April 28 that the Aston Plaza in Dubai, a popular Bitcoin-based real estate development project, will be putting its operations on hold, until further notice.

The real estate project cost a reported £250 million ($325 million), and it was developed by Scottish fashion designer and parliamentarian Baroness Michelle Mone, and her partner Douglas Barrowman, a Scottish investor and the Chairman of the Knox Group of Companies.

Aston Plaza

A smooth start

The couple launched the real estate project back in 2017, touting it as the first housing project where tenants could pay in Bitcoin. At the time, Barrowman had explained to CNBC on why they chose the cryptocurrency, describing Bitcoin as an emerging trend that would one day become a more mainstream means of investment.

Barrowman had said:

“I’ve been invested in the crypto world for the last couple of years really, and it’s a sector I’ve watched grow and emerge. So, I see it coming to that stage where the early adopters are giving way to a more mainstream application of cryptocurrency, and therefore it’s a logical extension to take land and buildings and effectively offer people the opportunity to pay in cryptocurrency or Bitcoin rather than just fiat currency.”

At its launch, Mone and Barrowman promised to complete construction by the summer of 2019, saying that they would be offering 150 out of the 1,300 apartments on the project to investors who could pay in Bitcoin. The couple reported to Business Insider in February 2018 that they had successfully sold 50 of the apartments already. Speaking with the financial news medium, Mone claimed that some buyers bought two apartments each, while one person even bought as many as ten.

As at the time of the sale announcement, the properties that were on offer ranged from simple studios, priced at $130,000 a piece (roughly 15.5 BTC as at then) to two-bedroom apartments that went for $380,000 (about 45 BTC). The project’s website shows that studios and two-bedroom apartments are now being offered for as low as 9 BTC.

However, the site also points out that the listing prices are pegged to the value of BTC to the US Dollar as at January 8, 2018, which means that 9 BTC would amount to roughly $147,000 (as opposed to its value of $48,780 at press time.

Tokenized Real Estate Investments

The reason for Aston’s suspension is still unknown. However, that isn’t to say that other companies aren’t doing their bit to revolutionize the real estate market. Last week, Smartlands, a British blockchain firm, announced that it would be launching its platform in a matter of weeks.

The Smartlands platform would provide liquidity in the real estate market by allowing developers to issue tokens that are linked to a specific property. The tokens can be bought and traded both on the platform and in a secondary crypto market.

The company’s announcement, which was published on April 26, gave users an overview of how the platform will work. Smartlands’ CEO Arnold Nauseda also noted that the tokens would allow investors to hold a fraction of a building’s equity. Investors get their returns in the form of rent, and on property sales.

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Brazilian Police Accidentally Discover Money Laundering Bitcoin Mining Farm

By CCN.com: A report published in local Brazilian news outlet Zero Hora has revealed that Brazilian police have made an arrest in connection with a suspected crypto money laundering scheme. An accidental discovery The report, which was published on April 23, claims that the State Department of Drug Trafficking (Denarc) in Porto Alegre, Rio Grande do Sul came upon a house where cryptocurrencies were being mined as they were on the trail of a suspected drug trafficker. Given that Bitcoin mining isn’t particularly popular in the region, the police went into the house, and a cursory search revealed 25 solitary

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Crypto Detective Firm Chainalysis is Now Snooping into 10 Cryptocurrencies

By CCN.com: Blockchain analysis and compliance firm Chainalysis wants to provide its users with the ability to perform investigations and keep tabs on ten popular digital assets, including Bitcoin, Ether and Binance Coin. In a post published on its official blog on April 24, the New York-based blockchain firm announced that it is expanding monitoring tools and the scope of its Chainalysis Reactor and Chainalysis KYT (Know Your Transaction) analytics tools. Real-time monitoring Chainalysis is a high-profile blockchain intelligence firm which provides various technologies that help organizations monitor the flow of cryptocurrencies on multiple blockchains and track any transaction suspected

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Suspected Drug Lab Operator & Crypto Money Launderer Arrested in Brazil

Police in Brazil has apprehended a suspect who is believed to have operated a clandestine drug lab, laundering the proceeds using cryptocurrencies.

According to a local report published on April 23, the State Department of Drug Trafficking (Denarc) in Porto Alegre, Rio Grande do Sul was able to trace a Bitcoin mining lab to a small house, while officials were on the trail of the suspected drug trafficker. The police considered the sighting unusual, as they found 25 separate cryptocurrency mining rigs at the site.

Illegal electricity and a suspicious operation. Grounds for an arrest?

The rigs reportedly ran 24 hours a day, operating on sophisticated hardware and software estimated to be worth about 250,000 reals (about $63,000).

The police claimed that the man who assumed responsibility of the mining equipment argued that he had rented the place and was running the Bitcoin mining shop as a business investment. The man denied involvement in any criminal activity in that area, pointing out that his “investment” was completely legal. However, he was charged for stealing and the illegal use of electric power in the vicinity.

Mining

Police at the Clandestine Mining Operation. Source

His equipment was also seized, as the officers suspected that they might have been smuggled into the country from China. Police also suspected that the man might have been a lookout or an illegal drug trafficking organization. Beyond the mining equipment and irregular electricity supply, the report claimed that they also found a firearm with an erased serial number, as well as a motorbike with cloned number plates.

A translated statement from Adriano Nonnenmacher, a police officer who was part of the raid, read, “The flat is well-hidden. We are going to investigate further. Everything points to a Bitcoin mining operation. They could be exchanging the money and use it to fuel drug trafficking. There’s also the possibility that they are using the funds derived from drug trafficking to buy Bitcoin.”

Manhattan busts its first crypto drug operation

Earlier this month, the Manhattan District Attorney’s Office indicted a group of people who were allegedly running their own illegal drug trafficking scheme and laundering money through Bitcoin as well. The individuals- named Chester Anderson, Jarrette Codd, and Ronald Maccarty- were indicted by Manhattan District Attorney Cyrus Vance Jr., the United States Secret Service, the United States Homeland Security Investigations (HIS), and the U.S. Postal Inspection Service (USPIS).

According to a press release published by the Manhattan D.A.’s Office on April 16, the individuals were suspected of running stores o the Dark Web, shipping “hundreds of thousands” of counterfeit drug tablets.

A raid conducted by authorities resulted in the recovery of 500 glassines of fentanyl-based heroin, 420,000 to 620,000 tablets of alprazolam, as well as gamma-hydroxybutyric acid (GHB), ketamine, and methamphetamine.

The alleged traffickers reportedly sold the drugs to customers across 443 states in the U.S., laundering $2.3 million in BTC by using preloaded debit cards and withdrawing their fiat currency at various ATMs. They are set to be arraigned before a New York State Supreme Court, with charges leveled against them including first-degree money laundering, as well as fourth and fifth-degree conspiracy.

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Brave Launches Ads Program but is it Sustainable?

Per a notice published on its official website, decentralized browser Brave has announced the launch of Brave Ads, a program that rewards its users for sticking around to watch promotional ads and videos. According to the notice, users of the browser’s latest version can opt-in to the Brave Ads program and watch “privacy-preserving ads.”

Brave Ads

Promising Results

Brave is an ad-blocking web browsing platform that was developed by Brendan Eich, former CEO of Mozilla and the developer of the JavaScript programming language.

The company will reward users who participate in the program with a 70 percent revenue share on ads viewed. The rewards will be distributed in the form of Basic Attention Tokens (BAT), a digital asset developed by the company and which can be used by users for various purposes.

The company notes that the brave Ads program allows customers to surf the web, support their favorite content developers, and earn rewards, all while keeping control of their privacy. Speaking on the launch, Eich said, “With Brave Ads, we are launching a digital ad platform that is the first to protect users’ data rights and to reward them for their attention. Brave Ads also aim to improve the economics and conversion of the online advertising industry, so that publishers and advertisers can thrive without the intermediaries that collect huge fees and that contribute to web-wide surveillance.”

The Value of BAT Rewards

At the end of every monthly usage cycle, users who view ads will receive their BAT rewards, which, for now, can be given to their most viewed websites or given to their favorite content developers on various platforms. In addition to that, Brave stated that it is “working on an option to let users withdraw BAT from their wallets for personal use, converting their BAT to local fiat currency through exchange partners.”

In an interview with TechCrunch, Eich said Brave has been reportedly testing the ads since January, with over 40 percent of desktop users already opting in to the program.

Brave also announced that it has partnered with The Giving Block to provide ad inventory and test use cases to non-profit and charity organizations that partner with the latter. The program, which already has notable participants like The Human Rights Organization, will present its users with messaging as an incentive to tip the organization via the Brave Rewards program.

Is it Viable?

As interesting as all of these sound, the Brave Ads platform does have some issues to contend with. For one, there’s the question of the ads themselves. The prospect of gaining tokens as rewards is still not enough to convince people to view ads; especially rewards with little to no practical use.

Eich admitted to TechCrunch that a vast majority of users who opted in back in January did so because of the anonymous browsing feature, which is the bedrock of the Brave browser. He also admitted that BAT is still not of much value to people, claiming that some users prefer to give it back.

Charitable as it seems, this purpose doesn’t sound sustainable. The platform will need to incentivize its prospective users, and frankly, charity-driven tokens simply won’t cut it.

Another issue with the ads is the run time. It’s still unclear how long users would have to watch ads if they intend to get a considerable amount of the BAT, but it’s highly unlikely that people will want to sit for so long do nothing but watch ads. Still, the mission here is to bring a fundamental change to the business model of most web-based companies. If the company can make the BAT much more valuable, then this launch could have benefits for all parties involved.

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Bittrex Clears the Air on the Flagged North Korean Users on its Platform

In a statement posted on its Twitter account on April 22, popular cryptocurrency exchange Bittrex has debunked the claims from the New York State Department of Financial Services (NYDFS) that it has North Korean users trading on its platform.

The NYDFS through the Executive Deputy Superintendent for Banking Shirin Emami, had published an op-ed where she pointed out that an examination of Bittrex’s accounts revealed the existence of at least two users based in North Korea.

North Korea Crypto

She noted:

“More may exist. At least one North Korean account was active into 2017. At least two Iranian accounts were still active in the Bittrex system when DFS examiners visited Bittrex in 2019, and potentially usable.”

However, in its tweet, the exchange offered a reason as to why the regulator’s examiners could have thought these users were North Korean. The tweet acknowledged the allegations from the NYDFS over the constitution of traders on its platform. However, after it examined the accounts flagged by the state regulator, it informed the latter that the same accounts had been investigated back in 2017.

In part, the statement from the exchange reads:

“South Korean residents mistakenly selected North Korea in our country dropdown menu, but we determined through country identification, physical, and IP addresses that ALL were from South Korea.”

No Approval for Bittrex

The entire situation started earlier this month, when the NYDFS denied the virtual currency license application that Bittrex had put forth, on the grounds that the exchange had failed to implement the best controls and policies as regards Anti-Money Laundering (AML), Office of Foreign Assets Control (OFAC) and Know Your Customer (KYC) standards.

Bittrex had applied for the BitLicense a permit required for crypto businesses to operate in New York since August 2015, although it had also continued to operate under the terms of “safe harbor,” with the permission of the NYSFDS. In a letter sent to Bittrex on April 10, the regulator pointed out that it had issued various compliance notices to the exchange and assisted it in a bid to “address continued deficiencies and to assist Bittrex in developing appropriate controls and compliance programs commensurate with the evolving nature of the sector.”

After various deficiencies in Bittrex’s security were found, the regulator had a team of examiners conduct a review of the exchange’s operations at two of its offices. Per the review’s results, the exchange failed to demonstrate that it would “conduct business honestly, fairly, equitably, carefully, and efficiently.”

Following the denial of the exchange’s application, the NYDFS gave Bittrex a 24 hours window to cease all of its business operations in the state and 14 days to submit a letter indicating that it had completely shuttered its operations in the state as well.

Bittrex Fights Back

Initially, Bittrex published a press release responding to the denial of its BitLicense application.

The release, which was published on the same day its application was denied, conveyed the exchanges disappointment at the regulator’s decision, as well as its belief that the imposition of this licensing requirement “harms rather than protects” crypto investors and customers based in New York.

It pointed out that the capitalization requirements set by the NYDFS were significantly higher than those of any other state. According to the exchange, the requirements were based on a pre-existing “hot wallet vs. cold wallet” storage formula, which failed to consider Bittrex’s range of assets, as well as the risks of moving assets from hot to cold storage regularly.

The exchange also highlighted that it screens every new customer to find out if they’re Specially Designated Nationals (SDNs; entities and vessels which U.S. companies and citizens are prohibited from engaging in business with) are properly screened), and it also tracks SDN updates from the OFAC.

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10 Years: Santa Clara Judge Passes the First SIM Swapping Sentence in America

A Santa Clara judge has sentenced a college student to 10 years in prison after he was found guilty of stealing millions in crypto assets through SIM swapping.

In what’s seen as the first official conviction of a crypto SIM swapping scam in the United States, Joel Ortiz, a 21-year-old student of the University of Massachusetts, was giving a 10 year prison sentence by Judge Edward Lee of the Santa Clara County’s District Attorney’s Office.

Jail

Ortiz was described as being a “prolific” SIM swapping scammer, whose judgment highlights an individual scam carried out by Ortiz, where he stole $5.2 million from an unnamed cryptocurrency investor from California.

The Magic of SIM Swapping

SIM swapping might be a new and relatively unpopular trend amongst crypto scammers, but as is with the case of Ortiz, it does have a potential to be quite lucrative. Primarily, the entire operation relies on the perpetrator’s convincing and manipulation techniques.

The hacker contacts the telecoms provider of the target victim’s SIM card and using the personal details he has about the target, will persuade the telecom operators to transfer the victim’s number from the current SIM to a separate one in the criminal’s possession.

Upon the successful SIM transfer operation, the service provider will send saved financial and Internet-related passwords to the new SIM card. This could include two-factor authentication entries, wallet passwords, verification codes, and much more.

Information stored on high-security and high-traffic domains, such as Email addresses, social media accounts, and cryptocurrency exchange accounts and wallets, are usually the targets of SIM swappers. Ortiz was charged in Santa Clara back in 2018 on 28 counts of alleged violations, including multiple computer-related violations and crimes associated with information law.

At the time, a police report revealed that he had duped over 20 people, with a lot of just over $5 million in digital assets.

He was eventually sentenced to 10 years in jail on February 1, although formal sentencing was just being set at the time.

Another Sim Swapper awaiting Trial

While Ortiz is the first SIM swapping sentencing to be formally carried out in the United States, he’s not the only person to be charged for the crime.

A document published on the Manhattan District Attorney’s website describes the case of Dawson Bakies, a 20-year-old tech whiz from Columbus, Ohio, who used the same SIM swapping technique to defraud multiple people off thousands of dollars in cryptocurrencies.

According to the details of the document, a grand jury in the state of New York had charged Bakies with a 52-count charge, including but not limited to identity theft, grand larceny, and computer tampering. The indictment alleges that Bakies targeted over 50 victims across the country, all of whom weren’t chosen at random.

Speaking on Bakies’ charge, Cy Vance, Manhattan’s District Attorney, said:

“Today, my office is putting the small handful of sophisticated ‘SIM Swappers’ out there on notice. We know what you’re doing, we know how to find you, and we will hold you criminally accountable, no matter where you are.”

Amongst many of the allegations leveled against Bakies, he was said to have stolen about $10,000 in cryptocurrencies from three Manhattan residents. However, a report by the New York Post alleges that his entire scam operation, which ran for no more than ten days, raked in about $500,000.

Local law enforcement found a personal computer and an iPhone, which contained multiple password recovery messages, during a raid of his apartment last year. While digging through his laptop’s hard drive, investigators discovered a file, titled “Hacker Shit,” which included the names of people he already attacked- as well as the three aforementioned Manhattan residents.

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